APSEZ will invest more than $675.68m in the project. Credit: Alex Duffy / Unsplash.

India’s Adani Ports and Special Economic Zone (APSEZ) will reportedly commence construction on a 3.5 million twenty-foot equivalent unit (TEUs) capacity terminal, West Container Terminal (WCT), at Sri Lanka’s Colombo port in December.

APSEZ will invest more than $675.68m (Rs50bn) in what is said to be its second international project after Myanmar.

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In March, the company obtained a letter of intent from the Sri Lankan Government for the construction of the terminal.

Officials told Business Line that the concession agreement for the 35-year build, operate and transfer (BOT) contract is scheduled to be signed in November.

APSEZ will hold a 51% stake in the terminal and John Keels Holding will own 34%.

The remaining 15% of the stake will be owned by the Sri Lanka Ports Authority (SLPA).

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With a water depth of 20m, the new terminal will have a 1,400m quay wall and terminal area of around 64ha.

The WCT’s first 600m quay length is planned to be finished for operational use within 36 months of the signing of the BOT agreement, whereas the complete quay wall is expected to be completed in 48 months.

Colombo Port happens to be the preferred regional hub for transhipment of Indian containers as well as mainline vessel operators.

It is projected to further benefit from the seven container terminals at the company’s 12 ports along the Indian coastline managing an annual volume of more than six million TEUs.

In addition, the WCT is expected to provide India with a presence at Colombo Port.

Earlier this month, the Sri Lankan Government declared that the terminal will be permitted to redeem a 25-year tax holiday under its Strategic Development Projects Act.

This tax holiday will begin from either the first year of profits or two years after commercial operations begin, depending on which is earliest.

In March, APSEZ announced plans to acquire a majority stake of 58.1% in Gangavaram Port Limited, currently owned by DVS Raju and family.